Borrower Tips
Bridging loans are a popular financing option in the property industry due to their versatility and ability to reach places other finance can’t. However, any savvy investor must examine all plausible finance options before committing to anything.
In this guide, we look at 14 alternatives to bridging loans, covering the pros and cons of each compared to bridging finance and how to find the best-fit loan for your needs.
A bridging loan provides a short-term financial solution, usually 24 months or less, that individuals or businesses can use to fund a property/land purchase or for other liquidity requirements.
They are commonly used to ‘bridge the gap’ between buying, selling, and refinancing a property or land.
Bridging loans can be arranged quickly, fund almost all property types, and often have flexible terms, making them a convenient finance option that is ideal for grabbing time-sensitive market opportunities.
However, there are many situations where there may be better options than bridging loans and exploring other viable alternatives to bridging finance can help you make the right choice. So, let’s take a look at alterative options to that of bridging finance.
To compare bridging loans against other borrowing options, it helps to know some key features of a bridging loan:
Whether a residential or commercial property, if it has built up equity, it might be possible to remortgage, either with the same or a different mortgage provider, to release capital.
The cost of switching your mortgage deal can vary from zero fees to a percentage of the loan amount, typically 1% or more. Your current provider might waive the arrangement and valuation fees.
The process is the same as initially arranging a mortgage, and as such, it can take several weeks. Remortgaging with the same lender tends to be quicker.
Mortgage rates are lower than bridging loans, ranging from sub 1% to 8% over the past few years. However, due to long-term borrowing, the total repayment amount will be significantly higher than short-term bridging loans. Rates can be fixed or variable.
The rate you pay and monthly payment amounts are agreed upon for a specified period, e.g., a fixed payment over 2 or 5 years, but the loan is arranged with terms up to 40 years. Exiting the loan early will incur early repayment charges.
They are income-assessed, with stringent affordability testing. A good credit history is a key factor.
Pros: Smaller, manageable monthly payments rather than a lump sum.
Cons: Limited to the amount of equity in your property. The T&Cs of your mortgage can be quite restrictive, such as regulating what you can do with your property.
Peer-to-peer lending (P2P) is a loan obtained directly from one individual to another, essentially missing out on the middleman in the banks.
The loan cost in terms of fees and interest rates is chosen by each lender, depending on the returns they want to achieve, so it can be cheaper than bridging finance.
P2P lending is often done through online platforms or specialist brokers, where you complete a form detailing how the loan will be used. On some platforms, decisions are made instantly, and the loan is received within a few days.
Pros: Easily accessible, can achieve better rates than traditional borrowing, user-friendly platforms, quick decisions, small to large loans available.
Cons: Typically require a personal guarantee, meaning assets are at risk, including personal assets, if you fail to repay. More dependent on good credit scores than bridging loans.
Another viable alternative to bridging loans is making a private arrangement with your personal network.
This can avoid arrangement fees and interest charges, as well as meet specific eligibility requirements set by lenders. Instead, a flat fee might be agreed. Funds can be transferred immediately if necessary, and the loan can be arranged on your and your family/friend’s terms, offering optimum flexibility.
Pros: It can be ultra-quick and avoids fees, early repayment charges, and high interest rates.
Cons: Owing money can add strain to a relationship, especially if it is not repaid as and when agreed.
It is possible to borrow money by using an asset as security for the lender, such as your property. If you fail to repay the loan, you risk losing the asset.
Lenders like low-risk deals, and a secured loan removes some of that risk, which means you may be offered lower interest rates than a personal loan. It also means you can access a secured loan if your credit score isn’t great.
Interest rates and arrangement fees can be similar to bridging loans, but unlike bridging, secured loans will often have early repayment charges.
How much you can borrow depends on your assets, but loans of £100,000 or more are common.
Pros: Likely to have lower interest rates than a personal loan, longer terms available than bridging loans.
Cons: Assets are at risk in the event of a default.
If only a small amount of funding is required, a personal loan can be a suitable alternative to a bridging loan.
Personal loans tend to be for amounts below £25,000 and can be obtained through banks and private lenders. They are unsecured, easy to apply for, and most financial comparison sites provide details on what you can borrow and at what cost.
Personal loan rates are typically lower than bridging finance and are most commonly repaid monthly, i.e. the debt amortises over the agreed term. Early repayment will incur charges.
They can be applied for online, through banks, or with a specialist provider and can be used for various scenarios, such as consolidating debt, buying a car, or home renovations.
Eligibility requirements vary, but they are typically assessed on affordability, income and good credit.
Pros: They can be quick and easy to obtain and are not asset-secured.
Cons: They cannot be used to purchase a property or as a deposit. Banks only offer limited lending amounts (check with your bank to see what their limits are).
A business loan can be a suitable alternative to a bridging loan for longer-term funding for business requirements.
Terms typically range from one to several years and are available through banks, credit unions, and online lenders. They are repaid in structured monthly instalments, allowing businesses to spread costs over a longer period rather than repaying them in a lump sum.
Additionally, business loans generally have lower interest rates than bridging loans due to the longer term and reduced risk.
Early repayment fees typically apply, though terms can vary. Business loans are frequently used for capital expenditures, expansion, or operational costs rather than immediate funding needs like bridging loans.
Eligibility is generally based on business income, credit score, and sometimes collateral, making them accessible to businesses with a solid financial track record.
Pros: Structured repayment schedule, lower interest rates, suitable for a range of business needs. These loans are often easier to manage in terms of repayment.
Cons: May be slower to obtain, often requires strong credit, and less suitable for immediate cash flow gaps or short-term property purchases.
Property chain loans are bridging loans that enable you to continue with the purchase of your house before receiving the proceeds from the sale of your current house.
Find out more about using a bridging loan to buy a house.
Commercial mortgages are long-term financing for commercial or semi-commercial properties. Terms can be up to 30 years, though 15 and 25-year terms are more usual. Like a residential mortgage, the debt is paid in small monthly instalments.
The monthly repayments can be capital + interest or interest only, in which case the debt is not reduced over the term.
Compared to bridging rates, commercial mortgages are typically lower. Arrangement fees range from 0.5% to 2.5%. Rates currently start from around 6% – lower on buy-to-let (BTL) and house in multiple occupations (HMOs) – and can be fixed or variable.
The loan is arranged on the basis of the rental yield covering the monthly repayments, or for owner-occupied commercial properties, it is based on the business trading accounts.
Lenders perform thorough due diligence on trading and business accounts, rental contracts, property valuation and the borrower’s credit file. As such, completion times are typically 8 weeks minimum.
Pros: Small, manageable monthly payments. Investment mortgages are assessed on rental income rather than borrower credentials.
Cons: Secured against the property. Pay back more over the long term. It is not a time-sensitive option.
Development Finance can enable ground-up developments or heavy refurbishment projects that involve planning permission and multiple build stages.
Lenders on the Brickflow platform can offer up to £300 million in funding for your project. Interest rates are mostly in line with bridging finance, with arrangement fees also typically being 2% of the loan amount.
They are complex and bespoke loans tailored to your project, with a detailed and thorough application process. As such, they take anywhere from a few weeks to several months to complete the deal.
Eligibility is based on the viability of the project, demand for that type of property, the developer's previous experience and the professional team employed.
Read our comprehensive guide on building the perfect project appraisal.
Pros: Can borrow more, the loan is bespoke to your project and paid in phases to ensure each stage of the project has the right funding.
Cons: There is much more that goes into the application process, often requiring demonstrable experience. If your project overruns, extending the loan can be costly, making a development exit bridging loan a plausible alternative.
A second-charge mortgage can be an option to access additional funding without refinancing your primary mortgage.
Secured against equity in your property, second-charge mortgages typically have lower rates compared to bridging loans, and terms can be up to 30 years.
Obtained via banks, mortgage brokers, or specialist lenders, and repaid in monthly instalments that amortise over the term of the loan. Early repayment fees generally apply.
This type of finance is typically used for property renovations, consolidating debt, or other substantial expenses rather than immediate funding needs.
Eligibility for a second-charge mortgage is based on factors such as property equity, income, and credit score, with affordability a key metric.
Pros: Lower interest rates than bridging loans, long-term repayment structure, suitable for various substantial financial needs.
Cons: Uses property as security, requires sufficient equity, may incur early repayment fees, and is less suitable for urgent, short-term funding needs.
Second-charge bridging loans provide a way to secure additional funds against the remaining equity in a property without disturbing the first-charge loan.
Like standard bridging loans, they are short-term, typically 1 - 24 months, but are subordinate to the primary loan, meaning they are paid after the primary loan.
Interest rates on second-charge bridging loans are generally higher than on standard bridging loans due to the increased risk to the lender.
Second-charge bridging loans are commonly used to access funds quickly using asset equity. As with any bridging loan, your exit strategy is key to application approval, but income and credit history can still be considered.
Pros: Quick access to additional funds without refinancing, suitable for short-term needs, and can be secured even with an existing loan.
Cons: Higher interest rates than standard bridging loans, limited to remaining equity. Asset secured.
Naturally, one of the obvious bridging loan alternatives is to use personal savings.
You have instant access to funding, no restrictions on how it is used, no application process to go through and no interest to pay.
However, the cost of using all your capital in one project, rather than diversifying across multiple investments, can significantly reduce your Return on Equity Employed (ROCE).
All of this has to be weighed up against the cost of a bridging loan.
Crowdfunding platforms allow individuals and businesses to raise funds from multiple investors by promoting their projects online. Crowdfunding campaigns can be used for various purposes, such as property developments, small business expansion, or product launches.
Unlike bridging loans, crowdfunding does not always have fixed repayment terms, as it can involve different funding structures, such as equity-based (investors receive shares in the project) or reward-based (backers receive a product or benefit).
The cost of crowdfunding varies depending on platform fees and the type of investment arrangement, but it typically doesn’t involve monthly repayments or high interest rates.
It can also attract investors who are genuinely interested in the project and may contribute additional expertise or support, but it requires well-considered marketing and a compelling pitch to attract investors. Many crowdfunding campaigns fail to get off the ground.
Eligibility requirements depend on the platform and project type, with many platforms requiring a solid business plan, financial transparency, and often a demonstrated track record.
Pros: Flexible repayment terms, no high interest rates, access to public interest and investment, and suitable for a wide range of projects.
Cons: High competition for investor interest, with no guaranteed outcome.
Property refurbishment loans are a type of bridging finance used specifically for refurbishing a property before refinancing or selling.
They are structured differently to, for example, a straightforward purchase bridging loan, as the total loan includes refurbishment costs as well as partly funding the purchase.
Read more details on our dedicated Refurbishment Bridging Finance page.
Bridging loans can be an ideal solution for borrowers who need funds quickly—especially property investors, developers, or homeowners facing time-sensitive opportunities like an auction purchase or a property chain delay.
Bridging loans are designed for short-term, high-value borrowing, making them a smart choice when urgency and large funding amounts are key. They remain the go-to choice when traditional finance can’t facilitate the transaction.
However, for borrowers who can manage a longer application process and prefer lower interest rates or structured repayments, alternatives like remortgaging, second-charge mortgages, or business loans may be more cost-effective.
The right choice ultimately depends on your circumstances.
Before committing to anything, shop the market, find out actual borrowing options and costs and make an informed decision.
Brickflow’s instant bridging loan calculator enables you to compare live loans from 100+ lenders, to find out exactly what you can borrow and at what cost.
Brickflow is the quickest and easiest way to find the best specialist finance loan on the market.
Whether you need bridging finance, a commercial mortgage or a full development loan, our award-winning tech enables you to search and compare live loans for your specific project, instantly.
See actual rates, fees, LTV ratios (Loan to Value), profit outcome and more. It is the quickest, most efficient and accurate way to model your deals and check they stack against borrowing costs.
You can filter and sort your results depending on your key criteria and apply directly from the platform with your intermediary (or a Brickflow broker partner), enabling you to potentially access property opportunities with a lower initial investment.
Here’s how it works:
Enter your property details into our live market comparison now - it takes seconds.
In this article, we explored various bridging loan alternatives that can cater to your short-term funding needs. From commercial mortgages to peer-to-peer lending, each option has its own pros and cons. Knowing the various funding options available to you can help you better choose what is right for you and find the best solution for your unique circumstances.
At Brickflow, our platform allows you to compare specialist loans from over 100 lenders and is the best place to start your search for finance.
Use our instant loan comparison tool to search the breadth of the market from banks, challenger and non-banks, and specialist lenders.
Knowing your finances before you start is game-changing for any property investor.
Yes, bridging loans are still widely used, especially in property transactions where quick funding can be crucial to securing a deal. They also offer a funding solution for properties that traditional mortgages cannot meet.
Yes, you can remortgage after a bridging loan. Many borrowers choose to refinance into a more permanent mortgage once the bridging period ends. It’s a key exit strategy for many bridging loans.
To exit a bridging loan, you need to repay the loan in full using either the proceeds from a property sale, a remortgage, or another funding source.
Without a clear exit strategy in place, you are unlikely to be able to secure a bridging loan.
Yes, many high street banks offer bridging loans. However, they are often reserved for existing customers, are not well advertised or particularly competitive.
Specialist bridging loan lenders typically offer more competitive deals than mainstream banks, with higher lending limits (therefore reducing your deposit requirements). They are also experts in processing loans quickly, working with specialist solicitors and property valuation models to ensure a more seamless process.
A quick look into some of the key differences between commercial and residential bridging loans, and other variations of bridging finance.
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